Wolf Bites Deeper

This man in the John Deere cap is listening to names being announced of children who are going to be allowed to stay in their Head Start classes, knowing that children whose names aren't called will be thrown out of theirs, not because of anything they did, but because of budget cuts mandated by the U.S. Congress in that neutral sounding "sequester."  He's in Columbus, Indiana, a neat little town I've seen, and Columbus was one of two places that resorted to a lottery to determine who would be dropped.  It turned out he wasn't affected, but this AP story quotes a mother whose 4 year old son was thriving in the program, learning the alphabet and numbers. He's out.  "He loves school," Miller said. "I don't know how I'm going to tell him he's not going back."

Study after study has reaffirmed the immense importance Head Start can have at a very crucial time in these young lives.  For families without the resources of the rich, this program is possibly definitive, more important to their children than the Ivy League school might be to the children of rich Members of Congress.

But this is only the beginning.  The White House estimates that Indiana alone could lose 1,000 Head Start slots.

Buzzfeed had another example: a long story on an army vet who just got a 27% pay cut at his new Defense Department job, and figures if the sequester goes on and layoffs start, he'll be the first to go. Since he's not the CEO of Penneys this cut hurt so much he's got a second job cleaning bathrooms at a pizza place. At the age of 40 he's trying to get back to combat, for the income.
 
But these are not just isolated instances. A piece in the Huffington Post asserts: "The grips of sequestration are just now beginning to be felt and the effects are already quite dramatic."  Amanda Terkel and Sam Stein  provide 100 examples of local services closed and people fired: a food pantry in Utah, a rehab center in Alaska, both closed; jobs lost in research, on an Air Force base, and a lot of impact on health care and schools.

It's not only that the rich and well connected aren't feeling this yet.  (Though some private airplane owners are starting to, and all air travelers probably will soon.)  It's a systems dynamics thing--it's sitting in traffic when the light is green, and moving ahead when the light is red.  Part of it is agencies holding off cuts as long as they can, hoping Congress comes to its senses, but when they finally have to cut, they will be deeper cuts.  But part of it is time lag.

The sequester cuts aren't hurting the twittering class, while all the economic news is about growth--factory orders, housing, etc.  Inflated corporate earnings make Wall Street joyous.  But it's not going to last.  None of it.  Not when money is not being spent on jobs, and when money is being taken away from the jobs that still exist, but won't for much longer.

Unemployment checks are going to be 10% lighter this month.  That's money drained out of the consumer economy immediately.  It will show up in the stats in a month or two.  The wolf is biting.  But the wolf is just getting started.